Certain Disgorgement and Fair Funds in Administrative Proceedings (Order Directing Appointment of Tax Administrator)
Overview
UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION
SECURITIES EXCHANGE ACT OF 1934
Release No. 51341 / March 9, 2005
Administrative Proceeding
File Nos. 3-10882, 3-11317, 3-11814, 3-11498, 3-10765, 3-11780, 3-9954, 3-11003, 3-11359, 3-11818, 3-11579, 3-11335, 3-11450, 3-11739, 3-11740, 3-11676, 3-11572, 3-11696, 3-11727, 3-11726, 3-11769, 3-11618, 3-11619, 3-11620, 3-11702, 3-11645
In the Matter of
Certain Disgorgement and Fair Funds in Administrative Proceedings
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Order Directing Appointment of Tax Administrator
The Commission's orders in the administrative proceedings on the attached list created Distribution and Fair Funds (the "Funds"). The Commission has solicited proposals from several tax firms, and has determined that Damasco and Associates, located in San Francisco, California, is best suited to act as tax administrator in these proceedings.
Accordingly,
IT IS ORDERED that:
A. Pursuant to Rule 1105(a) of the Commission's Rules on Fair Fund and Disgorgement Plans, Damasco and Associates be appointed as tax administrator (the "Tax Administrator") for the Funds with limited authority and power to: (1) act as the administrator for tax purposes for each qualified settlement fund ("QSF"); (2) prepare, sign, and file the necessary tax returns and tax-related documents for the Funds; (3) obtain the necessary tax-related documents and identifiers, such as an employee identification number, on behalf of the Funds; (4) perform other tax-related and reporting duties on behalf of the Funds as required by Department of the Treasury regulations relating to QSF administrators; and (5) communicate on behalf of the Funds on matters set forth in this paragraph.
B. The bond requirement of Rule 1105(c) of the Commission's Rules on Fair Fund and Disgorgement Plans is waived for good cause shown, specifically, as further described below, because the Tax Administrator shall never have custody or control of the Funds;
C. The Tax Administrator shall submit, at least 30 days prior to any date on which a tax payment is required on behalf of any QSF, or as soon as is practicable, documents showing the amount necessary to satisfy the tax liability of each QSF as well as all other documents supporting such amount. Where Respondent has agreed to pay the taxes of the fund, the Tax Administrator shall submit such documents to the Respondent, with a copy to the Commission staff member assigned to the relevant proceeding. The Respondent shall pay the amount of the documented taxes to the Tax Administrator by check or wire transfer. The Tax Administrator, in turn, shall be responsible for paying the taxes to the IRS and the relevant state taxing authority, if any, on behalf of the fund.
Where the funds are held by an Escrow Agent, the Tax Administrator shall submit the documents to the Escrow Agent, with a copy to the Commission staff member. The Escrow Agent is authorized to pay the amount of the documented taxes to the Tax Administrator by check or wire transfer from the fund. Such tax payments shall come first from any earnings or interest in the QSF, and second, if necessary, from the principal of the QSF. The Tax Administrator, in turn, shall be responsible for paying the taxes to the IRS and the relevant state taxing authority, if any, on behalf of the fund.
In all other proceedings, the Tax Administrator shall submit the documents to the Office of Financial Management ("OFM"), Securities and Exchange Commission, Operations Center, 6432 General Green Way, Stop 0-3, Alexandria, VA 22312, with a copy to the assigned staff member. OFM shall pay the amount of the documented taxes to the Tax Administrator by check or wire transfer from the fund. Such tax payments will come first from any earnings or interest in the QSF, and second, if necessary, from the principal of the QSF. The Tax Administrator, in turn, shall be responsible for paying the taxes to the IRS and the relevant state taxing authority, if any, on behalf of the fund.
D. The Tax Administrator shall comply with all reporting requirements applicable to a qualified settlement fund as defined in Treasury Regulations Section 1.468B-1(a), as amended, and shall file on a timely basis all required federal, state, and local tax returns, and shall contemporaneously provide copies of such filings to the assigned Commission staff member. A list of assigned staff will be provided to the Tax Administrator.
E. The Tax Administrator shall keep records and bill each QSF for the services provided to it. Each bill shall be reviewed by the assigned Commission staff member. In the proceedings in which the Respondent has agreed to pay for the expenses of the fund, the Tax Administrator will submit the bill to the Respondent for payment by check or wire transfer. Where the funds are held by an Escrow Agent, the Tax Administrator will first submit the bill to the assigned Commission staff member for approval. After the staff has approved payment of the Tax Administrator's bill, the Escrow Agent is authorized to pay the bill of the Tax Administrator by check or wire transfer from the fund. Payment shall come first from any earnings or interest in the QSF, and second, if necessary, from the principal of the QSF. In all other proceedings, after the staff has approved the bill for payment, OFM shall pay the bill of the Tax Administrator by check or wire transfer from the fund. Payment shall come first from any earnings or interest in the QSF, and second, if necessary, from the principal of the QSF. In all proceedings, the fees billed shall be as agreed upon in the Tax Administrator's engagement letter with the Commission, which will be executed by the Secretary of the Commission on behalf of the Commission.
By the Commission.
Jonathan G. Katz
Secretary